Rev. 05/02/19

DISCLOSURE STATEMENT AND PLAN OF REORGANIZATION
Chapter 11 (Small Business)

OVERVIEW:

The debtor may file a reorganization plan at any time, including a contested involuntary case. During the first 120 days of the case, only the debtor can file a plan (unless that time is reduced or extended). If the debtor's plan is on file within the first 120 days, the debtor has an additional 60 days to achieve confirmation (the “exclusivity period”). The 120 days can be extended to a maximum of 18 months. In a small business case, the debtor has the exclusive right to file a plan for 180 days after the order for relief. A plan and disclosure statement must be filed within 300 days (unless extended).

Unless the plan provides adequate information, a disclosure statement must be filed either with the plan or within a time fixed by the court. There are three options for small business debtors in filing disclosure statements: (1) the court may determine that the plan itself provides adequate information and that a separate disclosure statement is not necessary; (2) the court may approve a disclosure statement submitted on a standard form as approved by the court or adopted under the bankruptcy rules; and (3) the court may conditionally approve a disclosure statement subject to final approval after a notice and a hearing. A conditionally approved disclosure statement must be mailed at least 25 days before the hearing on the confirmation of the plan, and the hearing on the disclosure statement will be combined with the hearing on the plan itself.

Subsection 1129(e) requires the court to confirm a plan “not later than 45 days after the plan is filed unless the time for confirmation is extended in accordance with section 1121(e)(3).”

Unless shortened pursuant to Rule 9006(c), Rule 3017 provides for a court hearing on the adequacy of the disclosure statement on not less than 28 days notice to the debtor, creditors, equity security holders, and other parties in interest as defined in Rule 2002. The proposed plan and disclosure statement are then mailed with the notice of hearing only to the debtor, the trustee, any committee appointed under the Code, the Securities and Exchange Commission, and any party in interest who requests in writing a copy of the plan or the disclosure statement. All creditors and interest holders receive notice of the hearing.

Upon court approval of the disclosure statement, Rule 3017(d) requires that the following information be transmitted to all creditors, equity security holders, and the U.S Trustee: (a) the plan itself or a court-approved summary; (b) the approved disclosure statement; (c) notice of the time within which acceptances and rejections of the plan may be filed; and (d) such other information as the court may direct, including the opinion of the court approving the disclosure statement, or an approved summary of the opinion. Additionally, notice of the time fixed for filing objections and for the confirmation hearing, as well as the form of ballot conforming to the appropriate Official Form must be mailed to all creditors and equity holders entitled to vote on the proposed plan.

If the parties in interest in a Chapter 11 case fail to object to the adequacy of the disclosure statement or timely request a hearing on its approval, the court is not statutorily obligated to conduct a hearing.

              The proponent of a plan may modify the plan at any time before confirmation.

If the proponent of a disclosure statement becomes aware of new material information after the disclosure statement has been approved by the court and transmitted to solicitees, the proponent is under an affirmative duty to amend the disclosure statement so that it is not misleading in light of the new information.

Codes, Rules and Forms:
 

CM/ECF Event(s):

            Plan, Plan of Reorganization and/or Disclosure Statement (NOT to be used for Amendments)